Home's demand curve for wheat is D = 100- 20P. Its supply curve is S= 20 + 20P. 2. Now add Foreign, which has a demand curve*D=80-20p and a supply curve = 40 + 20P. Derive and graph Foreign's export supply curve and find the price of wheat that would prevail in Foreign in the absence of trade. b. Now allow Foreign and Home to trade with each other, at zero transportation cost. Find and graph the equilibrium under free trade. What is the world price? What is the volume of trade?
Home's demand curve for wheat is D = 100- 20P. Its supply curve is S= 20 + 20P. 2. Now add Foreign, which has a demand curve*D=80-20p and a supply curve = 40 + 20P. Derive and graph Foreign's export supply curve and find the price of wheat that would prevail in Foreign in the absence of trade. b. Now allow Foreign and Home to trade with each other, at zero transportation cost. Find and graph the equilibrium under free trade. What is the world price? What is the volume of trade?
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter6: The Economics Of Political Action
Section: Chapter Questions
Problem 15CQ
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Home's
D = 100- 20P.
Its supply curve is S= 20 + 20P.
2. Now add Foreign, which has a demand curve*D=80-20p
and a supply curve = 40 + 20P.
Derive and graph Foreign's export supply curve and find the price of wheat that would prevail in Foreign in the absence of trade.
b. Now allow Foreign and Home to trade with each other, at zero transportation cost.
Find and graph the equilibrium under free trade. What is the world price? What is the volume of trade?
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